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pcm983
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at the risk of getting laughed out of the room in a value-oriented investment club...

 

think the STZ deal does make this a "real" industry now. valuations obviously seem pretty high when you have these unproven enterprises trading at or above the tev / sales levels of high growth SaaS companies, which themselves could be argued are expensive.

 

one I've just started looking at that seems interesting is Green Thumb Industries - seems to be much cheaper on TEV / Sales vs. Tilray and this company actually has exclusively U.S. exposure through state licenses vs. many of the peer stocks which are exclusively Canada.

 

Also the founder / current CEO is a professional investor and the grandson of the founder of Jim Beam.

 

Currently at ~30x TEV / run-rate sales which is obviously high relative to any company, but that said revenues grew 300% YoY and 25% QoQ.

 

The long-run question which remains up for debate is whether these end-up being commoditized businesses in the long-run or whether they end up being classic CPG businesses or bear substantial resemblance to alcohol / cigarettes in terms of profitability and brand power.

 

While demand is definitely there, it does seem like there is an onslaught of supply coming online as well and I have seen some stories about a supply glut in different regions.

 

https://business.financialpost.com/cannabis/jim-beam-heir-turns-to-pot-with-plan-for-a-cannabis-empire-1

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at the risk of getting laughed out of the room in a value-oriented investment club...

 

think the STZ deal does make this a "real" industry now. valuations obviously seem pretty high when you have these unproven enterprises trading at or above the tev / sales levels of high growth SaaS companies, which themselves could be argued are expensive.

 

one I've just started looking at that seems interesting is Green Thumb Industries - seems to be much cheaper on TEV / Sales vs. Tilray and this company actually has exclusively U.S. exposure through state licenses vs. many of the peer stocks which are exclusively Canada.

 

Also the founder / current CEO is a professional investor and the grandson of the founder of Jim Beam.

 

Currently at ~30x TEV / run-rate sales which is obviously high relative to any company, but that said revenues grew 300% YoY and 25% QoQ.

 

The long-run question which remains up for debate is whether these end-up being commoditized businesses in the long-run or whether they end up being classic CPG businesses or bear substantial resemblance to alcohol / cigarettes in terms of profitability and brand power.

 

While demand is definitely there, it does seem like there is an onslaught of supply coming online as well and I have seen some stories about a supply glut in different regions.

 

obviously a big reason for the run in the comps to Canopy is speculation on STZ copycat deals by the likes of spirits players or CSD players which is being reported on in the press.

 

https://business.financialpost.com/cannabis/jim-beam-heir-turns-to-pot-with-plan-for-a-cannabis-empire-1

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  • 4 weeks later...

WTF...Tilray..which is expected to do sales of under $40 million this year (and is not profitable) had their market cap go up to $28 billion yesterday, just based on their CEO basically saying a pharmaceutical company should buy them in an interview with Jim Cramer.

 

 

...not a bubble at all

 

 

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WTF...Tilray..which is expected to do sales of under $40 million this year (and is not profitable) had their market cap go up to $28 billion yesterday, just based on their CEO basically saying a pharmaceutical company should buy them in an interview with Jim Cramer.

 

 

...not a bubble at all

 

Crypto traders (those who still have any money left) looking for a new exciting ride to jump into...

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I'm also in agreement with this. I think the vast majority of pot stocks are garbage but there might be nuggets here and there where you can find something great. The biggest problem I have with seriously pursuing this is the issue of Canadian investors who own cannabis-related companies having problems crossing the border...

 

Hopefully this will change? https://www.thestar.com/news/cannabis/2018/09/18/canada-us-urged-to-compromise-on-cannabis-at-border.html

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I think the vast majority of pot stocks are garbage but there might be nuggets here and there

 

 

Nice pun..intentional or not.

 

 

I have absolutely no idea what differentiates any of these marijuana companies from the rest of them. While I indulge once in a while, the business site of this is way outside my circle of competency.

 

 

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I think the vast majority of pot stocks are garbage but there might be nuggets here and there

 

 

Nice pun..intentional or not.

 

 

I have absolutely no idea what differentiates any of these marijuana companies from the rest of them. While I indulge once in a while, the business site of this is way outside my circle of competency.

 

I was so hoping someone would catch that :D

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If the Fed ever removes marijuana from schedule 1 listing, company's like Altria might start rolling up the best operators.

 

The best operators will all have one thing in common, ABSOLUTELY NO BOOTLEGGING.

There's no need if you're a good grower & have an effective marketing & sales team.

The temptation to bootleg is huge & the feds will catch poor operators eventually.

 

I have no interest whatsoever in marijuana stocks unless Altria winds up owning them (after they've done proper due diligence.)

 

Puff, puff, pass...

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  • 2 months later...
Guest 50centdollars

Anyone see this short presentation on Aphria at the Kase Conference?

 

 

Stock is down over 50% in 3 days. Presentation is pretty good. He laid everything out pretty clearly.

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That is a compelling case they make.  I am short some.

 

If you want to see an insane amount of cognitive dissonance check out the reddit group r/weedstocks.  The opinions are insane.  The level of ignorance for some invested in these companies is shocking, and I expected the knowledge level to be poor...

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That is a compelling case they make.  I am short some.

 

If you want to see an insane amount of cognitive dissonance check out the reddit group r/weedstocks.  The opinions are insane.  The level of ignorance for some invested in these companies is shocking, and I expected the knowledge level to be poor...

 

Still not as bad as some of the Crypto arguments during the peak. 

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I think risk of acquisition has dropped a lot now. For one bubble may have burst, reduces exec fomo. Also if Aphria is a fraud, as the report makes a compelling case it is, Corp lawyers may need to more due diligence down process. And slow down in purchasing process should allow valuations to matter more than sentiment.

 

 

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Cronos is a total POS. But it's one of the big names and the cost is obviously much lower than CGC or TLRY. These desperation moves are so obvious. I don't know how you get a GROUP of high paid executives together and come to a consensus that THIS is a good use of corporate resources. At least when PEP bought SODA or KO bought GMCR they pretended to have a plan... What's funny is that when it fails, rather than curb it, they'll buy it out completely just to bury it privately...

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  • 10 months later...

Hey all:

 

Here in Detroit there was a "gold rush" in marijuana dispensaries.  It was supposed to turn Detroit around, it was a GROWTH industry!

 

When I was working as an attorney out in the distant suburbs a couple years ago, I would sometimes have to drive down the infamous "8 Mile" road.  One side of 8 Mile is Detroit proper, the other is a suburb.  I would drive about 20 miles or so down 8 Mile to get to work. 

 

At one point in time, I counted just over 40 marijuana related businesses on 8 Mile. 90%+ of them were in Detroit.  I think 2 were in Southfield, 1 in Warren, everything else in Detroit

 

It was simply KRAZY.  All sorts of abandoned buildings were being bought, fixed up, and redone for MJ sales.  Some of the buildings had a tremendous amount of capital put into them.

 

Fast forward to today.  8 Mile certainly has a lot of dope shops...but several never opened/shut down.  There seems to be a shake out in the industry.  Of course, selling dope never overtook manufacturing.  People are grousing that there is also not enough tax money coming from it.

 

Who would have ever thought that casino gambling/lottery and dope sales wouldn't lead to a prosperous future? 

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Couldn't resist ....

 

One of my 'sidelines' is building the operational financial models for the Cannabis Industry.

The everyday tools and information that you need to run your business; inventories through to packaging, sales mix, margin analysis, excise reporting, etc. Aimed at the smaller players who cant afford an SAP/Oracle, AND the larger players who would like to run block-chain/smart-contracts on top of their existing SAP/Oracle. Lots of 'colourful' people in this industry ... but I'm just on the 'reporting' side of the business. 

 

A great many of these places were never intended to actually produce a store;

The hope was quick money, on the assumption that they would either get bought out, or become illegal money/pot laundering facilities. Landlords were happy to rent out/renovate, as to many - it would seem pretty damn hard to lose money at this. It is actually very easy to lose money at it, and it would seem that the 1st year track record will turn out to be even worse than it is in the restaurant industry.

 

I have been told that Detroit's geography, and numerous run-down buildings, make very attractive vertical greenhouses for growing under 'controlled' conditions (lights, hydroponics, etc.); permitting reliable production of high THC product, that can be locally packaged for cheap  ;)

 

SD

 

 

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